# What will my commercial loan cost?

Computes the monthly payment, the balloon, the total cost, and the APR of a commercial or business loan amortized over a longer period than its term, with points and fees.

- Page: https://www.acalculator.org/finance/commercial-loan-calculator
- JSON spec: https://www.acalculator.org/finance/commercial-loan-calculator.json
- Version: cee27d5a8f83

## Default answer

Example with the default inputs (Loan amount $500,000.00, Interest rate 8.5%, Amortization period (years) 20, Loan term (years) 5, Points (origination fee) 1%, Other fees $2,500.00, Loan start date September 30, 2026) on the example date Wednesday, September 30, 2026: A $500,000.00 commercial loan at 8.5% amortized over 20 years costs $4,339.12 a month and leaves a $440,635.92 balloon after 5 years; the APR is 8.89%.

## Inputs

| Key | Label | Description |
| --- | --- | --- |
| amount | Loan amount | The amount of the loan, before points and fees. |
| rate | Interest rate | The fixed yearly rate. The monthly rate is this ÷ 12. |
| amort | Amortization period (years) | The number of years the payment is figured over. |
| term | Loan term (years) | The years until the loan is due; whatever is still owed then is paid as a balloon. |
| points | Points (origination fee) | A fee charged as a percent of the loan amount and taken from the money you receive. |
| fees | Other fees | Other up-front fees in dollars (appraisal, legal, documentation), taken from the money you receive. |
| start | Loan start date | The day the loan starts. The first payment is one month later. |

## Outputs

| Key | Label | Description |
| --- | --- | --- |
| payment | Monthly payment | The level monthly payment, figured over the amortization period. |
| balloon | Balloon at the end of the term | The balance still owed after the last regular payment, due with it (0 when there is no balloon). |
| payments | Number of payments | The regular monthly payments in the term. |
| apr | APR | The yearly rate at which the payments and the balloon repay the cash you receive, so points and fees count as a cost. |
| fees | Points and fees | The points plus the other fees. |
| cash | Cash you get | The loan amount minus the points and fees. |
| interest | Total interest | All the interest paid until the balloon. |
| paid | Total paid | All the payments plus the balloon: the loan amount plus the interest. |
| cost | Cost of the loan | The total paid minus the cash you get: the interest plus the points and fees. |
| due | Balloon due | The month the balloon is due, when a start date is given. |

## Method

payment = L × r ÷ (1 − (1 + r)^−A), with r = rate ÷ 1200 and A the amortization months; balloon = the balance after the n payments of the term; APR = 12 × j, where the payments and the balloon discounted at j add up to L minus the points and fees.

## Assumptions

- The rate is fixed; interest is the balance × the yearly rate ÷ 12 each month.
- Payments are made at the end of each month, and the balloon is paid with the last one.
- Points and fees are paid up front out of the loan, so you receive the loan amount minus them.
- The APR follows the actuarial method of Regulation Z with a month as the unit period.
- Values are not rounded to the cent between months; only the display is rounded.

## Worked examples

1. amount = $500,000.00, rate = 8.5%, amort = 20, term = 5, points = 1%, fees = $2,500.00 gives payment = $4,339.12, balloon = $440,635.92, interest = $200,982.89, fees = $7,500.00, apr = 8.892274%, cost = $208,482.89. Source: Regulation Z, 12 CFR 1026 appendix J, annual percentage rate computations. https://www.consumerfinance.gov/rules-policy/regulations/1026/j/.
2. amount = $250,000.00, rate = 7%, amort = 10, term = 10, points = 0%, fees = $0.00 gives payment = $2,902.71, balloon = $0.00, apr = 7%, interest = $98,325.44. Source: Regulation Z, 12 CFR 1026 appendix J, annual percentage rate computations. https://www.consumerfinance.gov/rules-policy/regulations/1026/j/.
3. amount = $1,000,000.00, rate = 0%, amort = 25, term = 10, points = 2%, fees = $0.00 gives payment = $3,333.33, balloon = $600,000.00, interest = $0.00, fees = $20,000.00, apr = 0.252403%. Source: Regulation Z, 12 CFR 1026 appendix J, annual percentage rate computations. https://www.consumerfinance.gov/rules-policy/regulations/1026/j/.

## FAQ

### How is a commercial loan payment calculated?

The payment is figured over the amortization period: payment = L × r ÷ (1 − (1 + r)^−A), where L is the loan, r the yearly rate ÷ 12, and A the amortization period in months. A $500,000 loan at 8.5% amortized over 20 years costs $4,339.12 a month.

### What is a balloon payment on a commercial loan?

Many commercial loans are amortized over 15 to 25 years but fall due after 3 to 10 years. The balance left when the term ends is due at once as a balloon. The $500,000 loan above still owes $440,635.92 after 5 years.

### How do points and fees change the APR?

Points and fees come out of the money you receive, but you still repay the whole loan. The APR is the rate at which your payments and the balloon repay only the cash you get. With 1 point and $2,500 of fees, the 8.5% loan above has an APR of 8.89%.

### Do lenders have to disclose the APR on a commercial loan?

Regulation Z (Truth in Lending) covers consumer credit, not credit for business purposes, so a lender may quote only a rate and fees. This page works out the APR the way Regulation Z does for consumer loans, so you can compare offers on one scale.

### How does a balloon affect the APR?

Fees count for more when the loan is repaid sooner. A balloon after 5 years spreads the same fees over fewer years than a fully amortizing 20-year loan, so the APR is higher.

### Is the example rate a current commercial loan rate?

No. The page shows no live rates. The default rate and fees are examples; enter the terms a lender quotes you.

## Sources

- Regulation Z (Truth in Lending), 12 CFR 1026.3(a), exempt transactions: credit primarily for a business, commercial, or agricultural purpose. https://www.consumerfinance.gov/rules-policy/regulations/1026/3/
- Regulation Z, 12 CFR 1026 appendix J, Annual percentage rate computations for closed-end credit transactions (actuarial method). https://www.consumerfinance.gov/rules-policy/regulations/1026/j/
- Amortized loan payment and outstanding balance formulas: S. A. Broverman, Mathematics of Investment and Credit, chapters 3 and 5.